Dover Company began operations in 2012 and determined its ending inventory at cost and at LCNRV at December 31, 2012, and December 31, 2013. This information is presented below.

(a) Prepare the journal entries required at December 31, 2012, and December 31, 2013, assuming that the inventory is recorded at LCNRV, and a perpetual inventory system using the cost-of-goods-sold method.(b) Prepare journal entries required at December 31, 2012, and December 31, 2013, assuming that the inventory is recorded at cost, and a perpetual system using the loss method.(c) Which of the two methods above provides the higher net income in eachyear?

Transcribed Image Text:

Net Realizable Value Cost $346,000 410,000 12/31/12 $322,000 390,000